2014 TCM Today Webinar - Successful Use of Project Controls Practices - Carson

TCM Today Webinar Series

Chris Carson, FAACE, PSP, DRMP, CEP, CCM, PMPDirector of Program Controls

ARCADIS U.S., Inc.

Successful Use of Project Controls Practices

Chris Carson FAACE, PSP, DRMP, CEP, CCM, PMP• Director of Program Controls, ARCADIS U.S., Inc. • Certifications:

– Fellow AACE International, 2013– DRMP (Decision & Risk Management Professional ) – AACE International– PSP (Planning & Scheduling Professional ) – AACE International– CEP (Cost Estimating Professional) – AACE International– CCM (Certified Construction Manager) ‐ CMAA– PMP (Project Management Professional) – PMI

• University of Virginia, Mechanical Engineering, 1972• Professional Field: 42 years of experience in CM and CM Services specializing in Planning and

Scheduling, Cost Management, Risk Management , Forensic Analysis, Dispute Resolution• Active in AACE International

– Author & Contributor for Recommended Practices in Scheduling & Forensic Schedule Analysis– Recipient of 2011 AACE International Technical Excellence Award– Member CDR and Planning & Scheduling Committees

• Other Associations– Active in PMI College of Scheduling/ Community of Practice– Active in CMAA (Construction Management Association of America)– Active in Planning Planet & International Guild of Project Controls

• News:– Our PMI book, “Best Practices and Guidelines for

CPM Scheduling for Construction” was just published!

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Why Do We Care about High End Project Controls?

• Key to successful projects is effective Project Controls• Effective Project Controls comes from a structured approach

to developing the culture• It requires a commitment to staying at the forefront of the

industry• Project Controls oriented culture must be integrated with

Project/Construction Management

Introduction

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OVERVIEW OF PROJECT CONTROLS

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Project Controls

• AACE’s Recommended Practice 10S‐90 (6/07)– Project Control is “A management process for controlling the investment of resources in an asset where investments are made through the execution of a project. Project Control includes the general steps of:

• 1) Project planning including establishing project cost and schedule control baselines

• 2) Measuring project performance• 3) Comparing measurement against the project plans • 4) Taking corrective, mitigating, or improvement action as may be determined through forecasting and further planning activity.”

From AACE RP 10S‐90, Cost Engineering Terminology

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• Project Control Needs (From Wikipedia)– Cost Estimating– Risk Management – Schedule & Cost– Quality Control– Communication & Document Control– Time Control – Scheduling– Change Management – Schedule & Cost– Procurement – Schedule & Cost– Human Resources – Organization

• Missing Needs– Disputes – Claims & Dispute Resolution

Project Controls

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• Project Control Systems (Project Controls)– Scheduling ‐ Time Control

• Review of schedules for constructability, claims avoidance, progress monitoring & completion predictions

• Risk Management• Change Management

– TIA preparation/review– Analyses of changes & potential delays

– Cost Estimating – Cost Control• Procurement• Risk Management• Change Management

– Disputes – Claims & Dispute Resolution – Risk Control• Review and analyze independently• Defend owners against contractor claims

– Schedule Analyses – variety of methodologies– Creation of As‐Built Schedules

Project Controls ‐ Approach

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• Construction Management (CM)– Preconstruction Services

• Estimating & Cost Verification– Budgeting

• Scheduling– Conceptual Schedules– Master Schedules

• Constructability & Biddability Reviews– Outside Quality Control for Architect/Project– Check for accuracy and completeness

• Value Engineering (VE)– Can be formal process– Can be list of cost savings opportunities


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• Construction Management (CM)– Construction Services

• Project Controls (PC)– Estimating – budgets– Scheduling – review schedules, completion predictions

• Project Management (PM)• Quality Control (QC)

– QC Planning– Inspections

• Communication & Document Control– Manage Submittal Process– Manage Document Clarifications (RFI)– Manage all paperwork & document flow

• Human Resources – Project Staff Organization


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• Construction Management – Post Construction

• Resolution of outstanding claims

• Program Management (PGM)– Managing Multiple Projects as a Program– Includes Enterprise Systems for controls

• Portfolio Management– Managing groups of Programs – Used for financial projects

• Both Management Systems require a high level of reporting and Project Controls support

• Both require ability to evaluate groups of projects and summarize data across the Program or Portfolio


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AACE Required Duties for a Planning & Scheduling Professional

• Assist with development of planning & scheduling methods• Assist with implementation of planning & scheduling methods• Prepare procedures and guidelines for P&S related scheduling management &

control• Support project team efforts toward development of project plan• Support project team efforts toward translating that plan into the project

schedule• Lead in development and analysis of project schedules

– CPM software implementation– Time impact and delay analysis– Review of periodic schedule updates

• Monitor accurate schedule progress toward achieving desired project completion date

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INDUSTRY IDENTIFICATION OF PROJECT RISKS

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(McGraw Hill Construction; Mitigation of Risk in Construction: Strategies for Reducing Risk and Maximizing Profitability, 2011)

Time&CostRiskManagement

Survey ‐ single greatest risk to successful projects: Design/Project Changes and Scope Creep Budget/Cost Overruns Project Process Approvals Safety Site Conditions

These responses demonstrate the industry perceives its own processes, procedures and relationships as the greatest risks to a project, not external factors like the economy or labor markets.

Time&CostRiskManagement


GlobalConstructionDisputesGettingtheBasicsRight– ARCADISStudy

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GlobalConstructionDisputesGettingtheBasicsRight– ARCADISStudy

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Dispute Values

• Summary of Findings

(“Global Construction Disputes 2014 – Getting the Basics Right”, ARCADIS)

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Causes of Disputes



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Good Project Controls practices will reduce these causes!

Causes of Disputes

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Example – Cost Overrun Study

2011 McGraw‐Hill ‐ Smart Market Report 70% of Contractors report > 80% of projects

over budget ‐ average 14% overrun


Example – Time Overrun Study

2011 McGraw‐Hill ‐ Smart Market Report 24% of projects late ‐ average 17% overrun This is 2 months late for a one year project!



Support Studies ‐ Risk

• Look at Primary Risks

• Schedule Changes• Cost Changes• Financial Risk• Contractual Risk

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Note: Technical/Design/Engineering Issues are LOWEST of top identified risks!

CM and Engineering cannot easily act as the differentiator!

Schedule and Cost average are TWICE the risk!

So, Project Controls services are the differentiator!

Support Studies ‐ Risk


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PRE‐DESIGN PHASE

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Project Management

• Vital document is:– Construction or Project Management Plan (CMP or PMP), containing subsidiary plans:

• Cost Management Plan• Time Management Plan• Quality Management Plan• Scope Management Plan

• Team, Organization, Communication, Controls• Developed early but progressively elaborated as scope definition advances

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Project Management

• Construction Management Plan (CMP)– Sets benchmarks for Cost, Time, Quality, Scope Control

– Identifies Team– Sets Organization structure– Develops Communications protocols– Identifies Contract & Project Delivery Method

• Must be evaluated & updated during pre‐design and design

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Association for the Advancement of Cost Engineering (AACE) International’s Recommended Practice No. 39R‐06“Project Planning”

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AACE Project Planning RP

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Document that defines the CMP with: Requirements Elicitation and Analysis Asset Planning Project Implementation Project Scope and Execution Strategy Development Schedule Planning and Development Cost Estimating and Budgeting Resource Planning Value Analysis and Engineering Risk Management Procurement Planning Project Control Plan Implementation

From AACE RP No. 39R-06, “Project Planning”

Project Controls Plan

29From CMAA Standards of Practice

Association for the Advancement of Cost Engineering (AACE) International’s Recommended Practice No. 39R‐06“Developing the Project Controls Plan”

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Project Controls Plan RP

From AACE RP No. 60R-10, “Developing the Project Controls Plan”

PRE‐DESIGN PHASE

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Time Management

• Pre‐Design Scheduling– Milestone Schedule– Establish project duration

• Claims avoidance planning

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• Phase‐Oriented services– Detail increases as scope definition improves– Similar to Cost Estimate evolution

• Project/Program Level services– Master schedule

• All requirements– Design schedule

• Design only

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Time Management

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AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)No.37R‐06“ScheduleLevelsofDetail”Also–“SchedulingClaimsProtectionMethods”RPNo.45R‐08

Time Management

Cost Management

Capital Funding EstimatesPre‐Design Phase (Range + 50%, ‐25%)

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From AACE RP No. 35R-09, “Development of Cost Estimate Plans”

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AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)No.35R‐09“DevelopmentofCostEstimatePlans”Also–“CostEstimateClassificationSystem”RPNo.17R‐97

Cost Management

Pre‐Design PhaseConceptual/Feasibility Study

38R.S. Means CostWorks Model

Cost Management

CMAA Standards of Practice, Value Engineering “aligns Scope, Expectations, and Budget”.

Cost Management

Planning for the VE process is done during Pre-Design

“Value engineering and constructability assessments are important elements of the planning process.”

From AACE RP No. 39R-06, “Project Planning”

DESIGN PHASE

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Time Management

• Design Phase Scheduling– More detail/higher accuracy– Monitor design effort– Establish project duration for contractor bidding– Cost loading for funding and cash flow predictions

• Claims avoidance planning

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• Phase‐Oriented services– Detail increases as scope definition improves– Similar to Cost Estimate evolution

• Project/Program Level services– Master schedule

• All requirements– Design schedule

• Design only

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Time Management

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AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)No.37R‐06“ScheduleLevelsofDetail”Also–“SchedulingClaimsProtectionMethods”RPNo.45R‐08

Time Management

Cost Management

Capital Funding EstimatesDesign Phase (each successive Range tighter)Completion of Schematic DesignCompletion of Design DevelopmentIn‐Progress Final Design/Construction DocumentsCompletion of Bidding Documents

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AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)No.17R‐97“CostEstimateClassificationSystem”

Cost Management

CMAA Standards of Practice, Value Engineering “aligns Scope, Expectations, and Budget”.

Cost Management

Full VE process is done during Design Phase

“An SCR can be performed at any of the key design completion phases: schematic design, detailed design, etc., corresponding with various stages of construction document completion (30%; 60%; 90% 100%)..”

From AACE RP No. 48R-06, “Schedule Constructability Review”

AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)No.48R‐06“ScheduleConstructabilityReview”

Cost Management


Stakeholders’ Involvement in Risk

Stages at Which Firms Evaluate Risk Risk evaluation by A/E firms is concentrated in the pre‐design

and design phases, while risk evaluation by construction firms is concentrated in the bidding/negotiating and construction phases.

This finding conforms with the typical level of firm involvement in a traditional design‐bid‐build project. It also confirms that these firms do pay strict attention to evaluating risk before committing to a project.

Risk evaluation for owners is far more concentrated in design than in the pre‐design, bidding or construction phases.



Stages at Which Firms Evaluate Risk (Continued) This suggests that owners rely on information provided during

the design stages for much of their risk evaluation. It also may reflect the owners’ typical practice of holding contractors contractually responsible for much of the risk once construction is underway.

The use of integrated teams is one strategy that might alter the stage at which players become involved in risk evaluation. By its nature, an integrated team brings all players into the project at the outset, which could lead to design decisions that reduce risk and less expensive mitigation strategies.



AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)No.64R‐11“CPMScheduleRiskModelingandAnalysis:SpecialConsiderations”

Risk Management

AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)No.62R‐11“RiskAssessment:IdentificationandQualitativeAnalysis”

Risk Management

CONSTRUCTION PHASE

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AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)No.17R‐97“CostEstimateClassificationSystem”

Cost Management

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AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)No.53R‐06“ScheduleUpdateReview”

Time Management

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AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)RPNo.52R‐06“TimeImpactAnalysis”

Time Management

AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)No.645R‐11“IntegratedCostandScheduleRiskAnalysisandContingencyDeterminationusingExpectedValue”

Risk Management

POST‐CONSTRUCTION PHASE

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AssociationfortheAdvancementofCostEngineering(AACE)International’sRecommendedPractice(RP)No.29R‐03“ForensicScheduleAnalysis”

Disputes Resolution

ThepurposeoftheRPis“toprovideaunifyingreferenceofbasictechnicalprinciplesandguidelinesfortheapplicationofcriticalpathmethod(CPM)schedulinginforensicscheduleanalysis.”

Disputes Resolution

SKILLS FOR PROJECT CONTROLS PROFESSIONALS

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The Project Planning Effort

• Early master/planning schedule & budget developed• Integrated cost and schedule planning• Careful contract review• Value engineering & constructability review for efficiency• Continuous cost/budget feedback to designers• Schedule is designed to suit purpose; components match

needs• Hold formal schedule development/planning session

• Includes project management team• Incorporates claims avoidance• Incorporates risk management into session

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The Project Maintenance Effort

• Provide effective process for maintenance/usage of schedule• Timely regular updates with short interim planning• Separate progress‐only from revisions; power is in the analysis

(bifurcate schedule reviews)• Formal process of schedule analysis & feedback

• Includes trending & completion predictions• Includes claims avoidance & risk review

• Engage with continuous modeling of current means & methods• Continuous budget review and analysis• Continuous risk management with early identification of problems• Identify absorbed delays and analyze using appropriate Forensic

Schedule Analysis methodology

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The Project Maintenance Effort

• Effective & timely Change Management process• Includes prospective Time Impact Analysis for delay

resolution• Identifies disruption / inefficiency risks• Includes quick and accurate range or bottom‐up

estimating• Early and interactive implementation of any necessary

course corrections• Provide mitigation suggestions• Resolve all time related issues contemporaneously

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The Project Closeout Effort

• Provide final budget reconciliation• Document final as‐built schedule• Analyze any remaining delay or disruption issues using appropriate

Forensic Schedule Analysis methodology• Capture lessons learned

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Project Controls Soft Skills

• Responsibilities include– Provides “technical training and guidance” to PM team– Develops “leadership/team‐building skills”– Develops “written and verbal communication skills”

• Goal is for the PM team to understand what the Project Controls team is doing/producing/explaining

• This requires those good soft skills

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CONCLUSION

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Conclusion

• Following the AACE International Recommended Practices for Project Controls:– Provides implementation protocols for Project Controls working with the Construction Manager

– Augments & completes the Construction Management Plan with a professional Project Controls Plan

– Provides detailed guidance in the Project Controls Disciplines; Cost, Schedule, Risk, Forensic Analysis

– and

–Improves Project Success68

TCM Today Webinar Series

Chris Carson, FAACE, PSP, DRMP, CEP, CCM, PMPDirector of Program Controls

ARCADIS U.S., Inc.

Successful Use of Project Controls Practices